Henry Kravis Interview (page: 5 / 5)

I like to describe KKR as a football team with a two-headed quarterback George Roberts and myself call the plays. Everybody has got a position to play. Some play tackle and guard, and some play halfback. Not everybody can carry the ball, but if the people that are on the line don't play their positions, then the quarterback or the halfback or the ends are going to get tackled, and we are not going to go to the Super Bowl. If everybody knows the role they've got to play, and everybody is compensated according to how the team does, not just according to how you do as an individual, we're going to do much better. That's exactly how we've run this firm. We run it as a team. Not only does everybody have a say, but everybody knows what they have to do. We don't have to be telling people all the time what they have to do, these are self-starters at this firm.

You come out of Tulsa, Oklahoma, and you end up at 57th and Fifth in New York. What have been the obstacles. What have you had to overcome to get here?

Henry Kravis: The first thing I had to do was learn how to use the subway system. I couldn't even figure out how to get from Wall Street back uptown. When I was first down there, I took the wrong subway and ended up in Queens. That is a mechanical obstacle that I had to overcome.

I think one of the most important things that I've had to overcome is jealousy from the outside. Of learning that not everybody is going to be my friend. They will tell you they are, they will look at you and say one thing and then turn right around and do something exactly the opposite. Or stab you in the back. Sure, there are disappointments. There are disappointments in life. That's life.

Coming to a big city, the best background I could possibly have had is growing up where there is green grass. Growing up where family counts, where friends really count. And growing up as a kid, out on a playing field. Being on that playing field is so important, and that has given me the foundation for what I have today.

I like to tell the story about how I sold magazines as a kid in the seventh grade in Tulsa, Oklahoma. I'd go door to door, and I always had to be the best salesman. I wanted to go back to my junior high school and win the prize for the day of having sold the most magazines. That was a challenge for me. Or collecting waste paper, old newspaper. I'd go around, and I'd collect, and keep them in the garage. And my mother would say, "When are you going to get rid of that stuff?" and I said, "Well, when you take me down to the waste paper dump, we'll get rid of it then." And I'd collect it in my wheelbarrow, and go around the neighborhood, and she'd take me down and we'd load it on the scales, and they'd pay me $1.36, or whatever it was, for my newspaper, and I'd go back and do it again.

I guess that's where I learned inventory control, and marketing, and a little finance as a kid. Just pretty common sense kinds of things. It was building those blocks, slowly, one after another. Taking one foot and putting it in front of the other. Always keeping my eye on what I wanted to accomplish. Where did I want to be?

What about as a young guy showing up on Wall Street or in Texas?, You had to sell yourself to these people. You had the smarts and the maturity and the judgment. How do you do that?

Henry Kravis: Sometimes it's not easy. It doesn't matter whether you've got a card that has a certain title. As long as they know you are in a position of authority. Don't ever belittle yourself. You'd be surprised what you can do if you set your mind to it. I always had this attitude. I said, "I can sell. I can sell myself." If my ideas made sense, and it wasn't outlandish, and it wasn't crazy, and I wasn't being cocky, I got people to trust me. I remember one time, we were buying a brick company down in North Carolina. It was called Boren Clay Products. The owner of this brick company was about 75 years old. He refused to sell this company to his son-in-law. Even though the daughter's husband was running the company, and was doing a great job, he had to have somebody else to sell it to. We became that person. I must have looked to him like some kid right out of school. But at the end he says, "You are a pretty bright kid." We hit it off.

I didn't tell him everything he wanted to hear. But I was honest. I gave him my best judgment of how we could buy his company. That was one smart man because he sold his brick company to us right at the top of the cycle. He almost hit it to the day. The minute we bought it, we went out of the gate backwards. That was a challenge for me. I always liked that -- to convince somebody who was much older that, even though I may not have their gray hair or their maturity, I knew what I was talking about. I knew when to bring in the people with the gray hair at the right time. It was never "do this all on your own." Don't be afraid to have somebody who can get the job done. If it takes two people to get the job done, bring in two people to do it.

What are the responsibilities that go with wealth, with the kind of achievement that you have realized?

Henry Kravis: There are enormous responsibilities. My father taught me a lot about giving back to society. But often, because you make a large contribution to one organization, people just assume you will do the same to their organization. I give a lot of money to a lot of different organizations because I believe in so many different things. As the federal government and the states are cutting back, there is enormous pressure on the private sector to do more and more for these charitable organizations, and the not-for-profit organizations. I push our companies very hard to spend an enormous amount of their money each year on the not-for-profit sector. We've got to do that in every community which we serve, and some which we don't serve.

One of my hardest things has been to focus my efforts, and not be all over the yard. So I've focused them on drugs and education, which I put together, because I think they are interrelated very much. I've done some major things for Mt. Sinai Hospital, but that's one hospital, that's where I focused my efforts. So yes, there are pressures. Everybody wants me to be head of the capital campaign, or chairman of the board of whatever institution, and its always hard to say no.

I remember when Jim Evans and Lawrence Rockefeller came to me. Jim was the chairman at Union Pacific, and retired and became chairman of Central Park Conservancy. They asked me to be the chairman of a $50 million capital campaign. I got busy and I forgot about it. Three weeks went by, and at this point I felt so guilty I said, "Yes, I'll do it." The best thing he did was not push me, and not put any pressure on me. We've raised $47.5 million at this point, and we will get there. We have until June to do it. We will pull in the last part, I hope. But that's the pressure. If you do a good job at it, everybody else wants you to do it too.

What do you say to a young person who says, "Mr. Kravis, how can I go about achieving something in this life?"

Henry Kravis: First of all, pick a goal that is within reach. Not too low, and not too high. You can always raise the bar as you go along. I've long passed my early goals. Make a commitment to that. Believe in it. If you don't believe it, you are never going to get there, because you are never really going to make the effort. Be honest with yourself. Is this something that really interests me, or am I doing it because my father or my mother wants me to do it, or somebody else is doing it, so its sort of cool.

Stay off drugs. Get a good education. Because if you don't have the education, there is no way you are going attain that goal you set for yourself. And lastly, have the courage of your convictions. Stick with it, believe in what you have set out for yourself, and be honest with yourself and with others. Those are the things that I think are very important for any youngster today going through school. It's very hard. The world is a huge challenge, and there are so many pockets to look into. There are so many avenues to success. It doesn't have to be business, it can be anything. I tell my children, "You don't have to come into my business. Don't do something just because I did it. In fact, maybe it's better you didn't do that. But whatever you do, promise me one thing, give it your best effort." That's what I'd tell them.

What gives you the most fun?

Henry Kravis: Oh, I have a lot of pleasures. I love the being outdoors. I love fly fishing, particularly for salmon. I love to ski. My love is going to our house in Vail and trying new trails, and skiing the powder. I love to shoot, I love hunting, bird hunting in particular. Horseback riding. We've built a stable and indoor riding arena. So those four things, plus golf, which I don't play as much anymore, those are my passions. You have to do something like that to get rid of the tension, take your mind off what you are doing. I try to work out at least three times a week, early in the morning with a trainer. Got to do that to get rid of the stress and tension, and keep my body in somewhat reasonable shape. I feel better, my mind feels better. I enjoy doing that as well.

How do you balance personal and professional lives?

Henry Kravis: If you don't have a personal life, as far as I'm concerned, you are missing half of your life. There is nothing more important to me than my children and focusing on them. It's the quality of time with my children, not the quantity of time that I've found to be important. One of my sons is a very good wrestler in high school, and I try to get to as many meets as I can, and to his tournaments. I get as nervous and as excited as he does. If you don't have that, you can have all the money in the world, and you really don't have anything. In the end it's your family that counts. You have to make sacrifices on either side. You also to have an understanding family, to know that there are going to be some sacrifices. I'd rather be with them many times than out in the middle of nowhere meeting with some lender.